Gold Prices Edge Up Amid Strong Dollar and Inflation Concerns

Gold prices experienced a slight increase during Asian trading on Monday; however, they remained confined within a narrow trading range due to the influence of a stronger dollar. Traders are preparing for significant U.S. inflation data scheduled to be released later this week.

For the past two weeks, gold has largely hovered around the low $2,300 per ounce mark, as uncertainty regarding U.S. interest rates has made traders cautious. Spot gold rose by 0.2% to $2,325.52 an ounce, while August futures increased by 0.3% to $2,337.85 an ounce as of early in the session.

### Gold Under Pressure from Strong Dollar, Awaiting PCE Data

The primary pressure on gold prices stemmed from the strength of the dollar, which remained near its highest levels since early May. This dollar strength arose as traders discounted the likelihood of interest rate cuts by the Federal Reserve, particularly in light of robust purchasing managers’ index data released on Friday.

This data raised concerns that a strong U.S. economy may allow the Fed to maintain elevated interest rates for an extended period. Attention now shifts to the upcoming personal consumption expenditures (PCE) data, set to be released on Friday. This indicator is the Fed’s preferred measure of inflation and is expected to influence expectations surrounding interest rate changes.

The PCE data is anticipated to reveal some easing in inflation, but it is projected to remain significantly above the Fed’s annual target of 2%. The possibility of sustained high interest rates is generally unfavorable for precious metals, as it increases the opportunity cost of holding non-yielding assets.

Other precious metals saw declines on Monday after fluctuating within a limited range in recent weeks. Silver decreased by 0.3% to $1,005.10 an ounce, while platinum fell by 0.2% to $29.895 an ounce.

### Copper Prices Muted Amid Strong Dollar and China Concerns

The strength of the dollar also exerted downward pressure on industrial metal prices, with copper facing additional challenges due to fears of a potential trade conflict between China and the European Union.

On the London Metal Exchange, benchmark copper prices fell by 0.1% to $9,677.50 per tonne, while one-month copper futures stabilized at $4.4205 per pound.

Sentiment towards China, the world’s largest copper importer, has been negatively affected after the EU imposed tariffs on Chinese electric vehicle imports. This development has prompted strong reactions from Beijing, with officials hinting at possible retaliatory tariffs and the risk of a broader trade conflict between the two economic powerhouses.